As a general rule, Virginia courts are reluctant to enforce non-compete agreements because they are disfavored restraints on trade. However, when the agreements are narrowly tailored, restrictive covenants will be enforced. A recent decision from the United States District Court for the Eastern District of Virginia provides good guidance as to what type of agreement will be upheld. Update, Inc. v. Lawrence Samilow, Case No. 1;18-cv-00462-TSE-JFA (E.D. Va. 5/17/18).
Update is in the business of providing staffing and e-discovery services to clients in the legal industry. The defendant employee, Lawrence Samilow, was the company’s senior sales executive. A year after he was promoted into this role, he was asked to sign a non-competition and non-solicitation agreement in connection with a new compensation plan. The Non-Solicitation Clause provided as follows:
I acknowledge that information about [plaintiff’s] customers and customer prospects is confidential competitive information and constitutes a valuable trade secret. Accordingly, I agree that during the term of this agreement and for a period of one (1) year after my employment ends, I will not, either directly or indirectly, separately or in association with others, solicit or encourage others to solicit any of [plaintiff’s] customers or customer prospects located within fifty (50) miles of any office, branch office, or production facility of the [plaintiff] or with whom I had any contact during the term of my employment for the purpose of diverting or taking away business from [plaintiff].
I agree that during the term of my employment with Company, and for one (1) year after my employment ends for any reason, I will not directly or indirectly compete with Company by providing to another person or entity in competition with Company (defined below) the same or similar services as those that I provided to the Company during the term of my employment with Company. For purposes of this agreement, a person or entity is in competition with the Company if it provides legal staffing, managed review, legal consulting, information governance, electronic data discovery and litigation support services within fifty (50) miles of any office, branch office, or production facility of the Company, with the exception of any person or entity listed below as a “Prior Relationship”. This covenant not to compete is limited to the types of activities and services included within my Job Description described in my offer letter.